Partnerships with the private sector: one option to cope with the challenges
Governments' endeavours to turn underperforming utilities into sustainable service providers may - as one option among others - benefit from involving local, national or international private sector expertise. However, experience throughout the last decade shows how difficult change processes in the water sector tend to be: friction between partners and stakeholders over priorities means lack of clarity about roles and responsibilities, often resulting in high transaction costs and hampering success.
Good governance is key
These critical lessons demonstrate the need to focus on governance as a decisive element for successful change processes for three reasons:
- Firstly, good water governance makes policymakers and providers more accountable to water users. This will help to improve services and secure customers' understanding of the need for change and the possible contribution of a PPP approach.
- Secondly, good governance clarifies roles and spheres of influence between policy makers, administrations and service operators during the life-cycle of PPP processes, and therefore strengthens service effectiveness.
- Thirdly, good governance makes an operator more reliable and predictable and therefore more attractive to investment capital.
Experience shows that the design of effective PPPs, requires clear and transparent guidance that focuses on water governance. The toolkit accompanying these pages is designed around ten themes for good governance.